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UPDATE 1-IMF likely to downgrade forecasts to global growth

Published 03/02/2009, 07:39 AM
Updated 03/02/2009, 07:40 AM

(Updates with more details)

PORTO, Portugal, March 2 (Reuters) - The International Monetary Fund is likely to downgrade its global 2009 growth forecast into negative territory, the IMF's Western Hemisphere Department head, Nicolas Eyzaguirre, said on Monday.

"We cannot say things are getting better yet," Eyzaguirre told a conference of Ibero-American finance officials, according to a copy of his speech. "In fact, the IMF is likely to move its global growth forecast down further, probably into negative territory."

In its latest forecasts, in January, the IMF estimated global growth of 0.5 percent in 2009.

The IMF official also said that the fund urgently needs more funding to help countries through the global financial crisis.

"We need to dispel concerns over IMF resources," he said. "The IMF needs more financial resources, and fast. We think that doubling of the Fund's lending ability would be a good start - but we are not yet even there."

Eyzaguirre said Latin America was in a stronger position to weather the global financial crisis due to improved economic policies over the past 10 years but warned that the crisis was deep.

"The bad news: this time around, the external shocks are worse: deeper, more global, and longer lasting," he said. "And, as I said, it's not over: it's going to get worse before its gets better, in our region, and globally also." (Reporting by Sergio Goncalves, Paul Day; writing by Axel Bugge; Editing by Ron Askew)

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